TCFD-compliant disclosure

Endorsement of TCFD
Governance
Strategy
Risk Management
Indices and Goals

Endorsement of TCFD

Anritsu endorsed the Task Force on Climate-related Financial Disclosures (TCFD)* on June 30, 2021 and discloses information in compliance with its recommendations on here.

* International task force established in 2015 by the G20 Financial Stability Board. It was disbanded after completing its role in October 2023, and its functions were integrated into the International Sustainability Standards Board (ISSB).

Governance

Anritsu's Board of Directors oversees environmental management, and the Chief Environment Officer is responsible for promoting activities and risk management. The Chief Environment Officer oversees the Environment & Quality Promotion Department, which is responsible for the Anritsu Group's environmental strategy. The officer also serves as the chair of the Environmental Management Committee and the Global Environmental Management Meetings, thereby ensuring that risks and opportunities are evaluated and managed globally. The officer regularly reports the results of the management cycle to the Management Strategy Conference and the Board of Directors for their opinions and necessary instructions.

With regard to the materiality of climate change, the Board of Directors resolves investment proposals such as the introduction of renewable energy power generation facilities and energy-saving facilities based on the application plan for the SBT initiative discussed at the Management Strategy Conference and Anritsu Climate Change Action PGRE 30 (hereinafter referred to as PGRE 30), and also confirms the progress of greenhouse gas emissions reduction targets and the PGRE 30.

The disclosure of information on climate change will be discussed and approved by the Management Strategy Conference each fiscal year as part of the development or review of the Mid-Term Business Plan (GLP) and reported to the Board of Directors, which will supervise such disclosure.

In calculating short-term incentive awards for officers, we use sales, operating profit and achievement of sustainability targets as indicators of each individual's contribution. Sustainability targets include climate-related targets (reducing greenhouse gas emissions, improving the proportion of electricity generated from solar energy).

Strategy

Based on scenarios of a 1.5°C or 4°C increase in temperature, we are conducting climate-related analyses by identifying risks and opportunities over short-term (1 year), medium-term (3 years), and long-term (up to 30 years) timeframes. These scenario analyses take into account the impact on our business strategies and financial plans, including the entire value chain. As a result, we have identified potential impacts such as stricter regulations and physical risks at some production sites, and have formulated countermeasures. In addition, we have committed to developing solutions that contribute to a decarbonized society.

Risk and Opportunity Scenario Analysis

Type	Contributing Factor	Scenario^*1	Detailed Description	Time Period	Possible Impact	Impact Level^*2	Measures
Transition risk	Implementation of carbon taxes	1.5°C	Taxation of greenhouse gas emissions	Long term	The costs associated with doing business are increasing.	Slightly large	Scope 1+2 CO₂ reduction with SBT for a 1.5°C target. Introduction of internal carbon pricing.
Transition risk	Implementation of carbon taxes	1.5°C	Economic stagnation due to rising prices	Midium term	Sales decline due to reduced or delayed customer investment. Profit decreased due to procurement difficulties and increased component costs.	Medium	Encourage the development of solutions that combine software-based virtualised test environments and software-defined radio; and building a business model that is less sensitive to component price volatility.
Physical risk	Natural disasters becoming more frequent and severe	4°C	Extreme weather events are becoming more frequent and severe in various regions.	Long term	Impact on factory operations and procurement of materials.	Large	Reduced disaster risk through construction of a new building at TOHOKU ANRITSU CO. LTD.'s second factory. Map the main manufacturing and sales locations of our suppliers to minimize the impact on procurement in the event of a disaster. Implementation of a mechanism that allows us to source from a number of different companies. Implementation of flood prevention measures at overseas production sites.
Physical risk	Natural disasters becoming more frequent and severe	4°C		Long term	It is becoming increasingly difficult to ensure quality in the manufacturing process due to rising temperatures.	Large	In 2023, we introduced and began operating an air conditioning management system that is not affected by changes in outside temperature.
Opportunity	Change in energy mix	1.5°C	The ratio of renewable energy generation is increasing.	Long term	Lower costs for installing solar power generation equipment.	Slightly large	Promoting PGRE 30 to increase the ratio of private power generation and reduce electricity prices. In FY2024, the 3,094kW solar power generation facilities installed so far were in operation. The second factory at Tohoku Anritsu operates a system that combines mega solar power generation equipment and storage batteries.
	Advancements in energysaving technologies	1.5°C	Investment drives innovation and makes it available.	Medium term	Incorporate new energy-saving technologies into our products and improve their environmental value.	Slightly large	Encouraging the development of environmentally friendly products to make products more energy efficient. Active incorporation of energy-efficient components into product design.
	Change in market	1.5°C	Increasing demand for products that offer greater functionality and higher environmental performance.	Medium term	There is an increased demand for simulation test environments, such as virtualization, as more customers desire development without the need for prototypes.	Large	Provide the solutions that combine softwarebased virtualised test environments.
				Medium term	Increased demand for products needed to make data centers more energy efficient.	Slightly large	Providing solutions for the development and manufacturing of photoelectric fusion devices for next-generation green data centers. Providing low power consumption/high power efficiency optical devices.
				Long term	The transition to electric vehicles will lead to increased demand for evaluation equipment, which is essential for the development of energy-efficient powertrains and batteries. Demand for energy management systems for the efficient use of renewable energy and fuel cells will grow in social infrastructure.	Large	Develop and provide test solutions that improve the quality and increase the efficiency of development of energy-efficient powertrains and batteries used in EVs. Acquiring business opportunities for energy management systems through collaboration with partner companies.
	Natural disasters becoming more frequent and severe.	4°C	Worsening food production and supply and demand conditions due to intensifying.	Long term	In order to further reduce food waste, there is an increasing demand for foreign object detection and pinpoint sorting of defective products at the raw material stage.	Slightly large	Practical application of a solution that can identify quality defects such as colour, constituents, insects, bacteria and ingredients at the raw material stage. Providing solutions to improve the accuracy of foreign object detection, production line monitoring, and defective product sorting through the use of DX, AI, and robotics.
			Extreme weather events are becoming more frequent and severe in various regions.	Long term	Investment in disaster prevention equipment will increase and the demand for solutions to prevent and mitigate disaster risks, such as road and river monitoring, will also rise.	Medium	Strengthening the ability to respond to disaster prevention and mitigation solutions, such as video information systems, with partner companies.
				Long term	Increased demand for remote monitoring solutions to cover the shortage of operational personnel due to the declining birthrate and aging population.	Medium	Providing solutions that contribute to the realization of more advanced disaster prevention and mitigation systems utilizing ICT systems.

*1 Reference scenarios: [Transition] IEA NZE by 2050 [Physical] IPCC RCP 8.5

*2 “Impact” is determined based on our own five-point scale (Large, Slightly large, Medium, Slightly small, and Small) that takes into account the amount of financial impact in terms of sales and profits, and the likelihood that the risk or opportunity will materialize. Note that “Slightly small” and “Small,” which have little impact, have been omitted.

Risk Management

Climate change-related risks and opportunities are included in environmental risks, and integrated into the risk management system that comprehensively manages risks throughout the group. Individual risks and opportunities are identified by each business division, corporate division, and group company in the mid-term business plan (GLP). The Environmental Management Committee identifies significant items based on their impact and likelihood to occur, and identifies measures to address them. The results are regularly discussed and approved by the Management Strategy Conference and reported to the Board of Directors.

Please see the scenario analysis for risks and opportunities and their corresponding response strategies.

Indices and Goals

Anritsu uses its SBT-certified greenhouse gas (CO2 equivalent) emissions reduction targets (Scope 1+2 and Scope 3) and the ratio of in-house renewable energy generation as indicators.

CO₂ emissions in Scope 1+2 are mostly due to energy consumption. The main initiatives include the private generation of renewable energy through Anritsu Climate Change Action PGRE 30 (PGRE 30) and energy-saving activities in factories and offices. PGRE 30 is an initiative to increase the Anritsu Group's ratio of private renewable energy generation to about 30% by around 2030 by installing solar power generation facilities equivalent to a total of 8,000MWh of annual power generation at the Atsugi Site, Tohoku Site, and Anritsu Company. In FY2024, the 3,088kW solar power generation facilities installed at the Atsugi Site, Tohoku Site, and Anritsu Company (U.S.) were in operation the entire year. A 6kW solar power generation facility is also in operation at the Kawasaki Site. Storage batteries with a rated capacity of 2,400 kWh have also been installed at the Tohoku Site, and a portion of the power needed at night is provided by stored renewable energy. These initiatives resulted in a renewable energy generation ratio of 12.5% for FY2024.

In energy conservation activities, the energy conservation team continued to play a central role. In addition to proper air conditioning management and thorough energy conservation in laboratories, content was created on the intranet to allow employees to check electricity consumption and electricity rates, raising awareness of energy conservation among employees. We are also working to offset emissions through contracts with electric power companies that supply electricity derived from renewable energy sources and by utilizing the J-Credit System*1.

Scope 1+2 emissions in FY2024 were reduced by 31.1% compared to FY2021, the base year for the SBT 1.5°C target, due to in-house generation and consumption of renewable energy by PGRE 30 and energy-saving activities.

For Scope 3, we are working to reduce "purchased products and services (Category 1)" and "use of products sold (Category 11)," which account for 84.5% of total Scope 3 emissions (FY2024 results). We continue to collaborate with suppliers, develop environmentally friendly products, and promote them to our customers. In FY2024, emissions were reduced by 37.3% compared to FY 2019, the base year for the SBT Well-below 2°C target.

*1 J-Credit System
System whereby the government certifies as "credits" the amount of greenhouse gases reduced or absorbed through the introduction of energy-saving equipment and the use of renewable energy. Companies and local governments can purchase these credits and use them to reduce their own greenhouse gas emissions.

KPI	Target		Results for FY2024
Reduction of greenhouse gas emissions	Scope1+2 (1.5°C target)	Achieve carbon neutrality by 2050	31.1% reduction
	Scope1+2 (1.5°C target)	Reduce by 42% compared with FY2021 by FY2030^*1	31.1% reduction
	Scope 3 Category 1+11 (Well-below 2°C target)	Reduce by 27.5% compared with FY2019 by FY2030^*1	37.3% reduction
Increase in the ratio of private solar power generation	Increase the Anritsu Group’s solar power generation ratio, which was 0.8% in FY2018, to approximately 30% by around 2030, based on the electricity consumption of that same fiscal year. (Anritsu Climate Change Action PGRE 30)		12.5%

*1 Targets certified by the SBT initiative

*2 Excludes the electricity consumption of AT Techmac (currently Anritsu Techmac), which was not a wholly owned subsidiary of Anritsu at the time this target was formulated

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